GCC debt capital market momentum set to extend into 2026 -Fitch

Debt capital market (DCM) activity in the GCC is set to remain active well into 2026, backed by a healthy pipeline, according to a Fitch report seen by EnterpriseAM. The credit ratings agency sees USD-denominated issuance driving growth next year, supported by a mix of government initiatives and funding needs.

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The region’s outstanding debt capital market hit the USD 1.1 tn mark at the end of 3Q 2025, up 12.7% y-o-y. Sukuk made up 40% of the total, up roughly 22% from a year earlier, while bonds rose just 7.2% y-o-y. Outstanding ESG debt climbed to USD 62.8 bn during the quarter, while ESG-linked sukuk reached USD 29.7 bn, up 54.1% y-o-y, with the lion’s share denominated in USD.

The 9M picture: New regional DCM supply dipped 5.6% y-o-y to USD 280 bn in 9M 2025, with USD-denominated sukuk climbing 61.3% y-o-y to USD 4.5 bn. USD-denominated issuances accounted for 46% of that total, while ESG issuance from the GCC hit USD 14.9 bn in 9M, up 8.5% y-o-y. No rating defaults were recorded during the period.

Saudi Arabia was the GCC’s most mature DCM, accounting for 46% of outstanding regional volumes, followed by the UAE with 30%. The two markets together made up nearly 93% of outstanding ESG sukuk in 3Q, while Saudi Arabia generated over 60% of the region’s ESG issuance in 9M. Both countries are also in line for deeper foreign participation — with each being reviewed for inclusion in JPMorgan’s Government Bond Index-Emerging Markets Watch List.

Banks continue to dominate: Banks continue to dominate participation in the region’s debt markets, especially in the sukuk segment, while local currency issuance by corporates and banks remains uncommon across most GCC markets, with Saudi Arabia standing out for its more developed SAR-denominated market.

Ranked among the top EM issuers in USD: GCC names generated 32% of emerging-market USD issuance over the period and make up 26% of outstanding EM USD debt, excluding China. This puts the region on track to become among the leading EM USD debt issuers in 2026, the report read.

The ratings mix remains skewed toward higher-quality names, with 65% of outstanding Fitch-rated sukuk sitting in the A category, followed by BBB (11%), BB (10%), B (9%), and AA (5%). Nearly 85% of issuers carry stable outlooks. The average tenor of Fitch-rated GCC sukuk stood around eight years as of end-9M, reflecting relatively long-dated structures across the region’s sovereign and corporate issuers.

Fitch’s breakdown of rated sukuk by sector shows sovereigns accounting for 31% of outstanding volumes, followed by corporates and other issuers at 26%, financial institutions at 24%, international public finance entities at 13%, and infrastructure and project-finance issuers at 6%. This distribution highlights the central role governments and banks continue to play in shaping the GCC’s sukuk landscape.

Not without risk: GCC debt markets face pressure from oil price swings, rate volatility, shifting sharia standards, and geopolitical risk, all of which influence fiscal positions, funding costs, and investor appetite. Market depth and maturity also vary widely across its six member states.

THE CLOSING BELL: TADAWUL-

The TASI rose 0.1% on Thursday on turnover of SAR 3.2 bn. The index is down 8.5% YTD.

In the green: Senaat (+7.4%), Rasan (+7.4%), and Saico (+5.2%).

In the red: Oasis (-2.3%), Artex (-2.3%), and Saudi Re (-2.2%).

THE CLOSING BELL: NOMU-

The NomuC rose 0.8% on Thursday on turnover of SAR 51 mn. The index is down 23.5% YTD.

In the green: Horizon Food (+18.1%), Inmar (+8.7%), and Ladun (+8.7%).

In the red: Horizon Educational (-9.9%), Meyar (-8.4%), and Tadweeer (-6.8%).